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Wedged between Tunisia and Egypt, it was only a matter of time before the seismic shocks of the region-wide democratic rebellion were felt in Libya. Overnight Tuesday, the oil-rich country's second city, Benghazi, was rocked by an explosion of protest rare in the 41 years of iron fisted rule by Muammar Gaddafi. Protesters and police clashed on several major streets, and about 150 demonstrators stormed into the streets on Wednesday demanding the release of jailed human-rights lawyer Fathi Terbil. "I'm really scared!" shouted one activist, Idris al-Mesmari, down the telephone to Al Jazeera Television, shortly before the police arrested him too. "They are using water cannons."

Videos shot on mobile phones and posted on YouTube show panicked crowds trying to flee a police assault against a protest. Then there is a short burst of gunfire, and shouts off-camera from those who appear to be injured. After dark, protesters can be seen gathering outside the Benghazi offices of the security police  which has widespread powers to detain people without trial  chanting for Gaddafi's removal. "They hit some of the protesters and some were injured," a demonstrator, Fakhor Alhaj, told Al Jazeera. "The security forces arrested the injured."(See TIME's Photos of Protests Across the Middle East)

The regime isn't relying only on its security forces to stamp out any effort by Libyans to emulate Tunisia and Egypt. Early Wednesday morning thousands of pro-Gaddafi demonstrators marched in Benghazi and the capital Tripoli, as well as smaller cities around Libya. At the same time, Al Jazeera reported Wednesday afternoon that the government had released Terbil, who represents numerous political prisoners jailed in Tripoli's Abu Salim prison, where a 1996 prison riot saw hundreds of inmates killed.

The human rights lawyer's release might not quell the unrest, however. On Wednesday, an unnamed Libyan protest group named Thursday as a nationwide strike day and a "day of protest" echoing the language of democratic movements in Tunisia and Egypt.

Gaddafi, who is called simply The Leader, appears to have sensed the danger of refusing to listen to grievances, according to a well-placed Libyan source in Tripoli, who spoke to TIME by phone on Wednesday. The source said Gaddafi had lately met groups of students, journalists, lawyers and others to hear their complaints, including the dire shortage of housing. "For the past few weeks the Leader himself has been heavily involved, with people coming from all over the country," said the source, who retains close relationships with the Libyan government. One urgent problem is alleged corruption, in which Libyans believe government officials are involved. As long as the regime survives, said the source, "no reform will happen in Libya without heavy interference from Muammar Gaddafi himself." (See Pictures of the Rise of Libya's Colonel Gaddfi)

On the face of it, a leader who seized power in a bloodless military coup in 1969 during President Richard Nixon's first term of office ought to be concerned about his prospects of surviving the wave of people's power sweeping across the Arab world. But in an apparent show of confidence, the government announced that on Wednesday it would release from prison some of its most fervent opponents. About 110 Islamic militants were scheduled to be freed on Wednesday evening, some after decades in jail. They include about 40 members of the Libyan Islamic Fighting Group, or LIFG which a few years ago renounced violence and cut its allegiance to al-Qaeda, in a deal negotiated with Gaddafi's son Saif. Noman Binotman, a former leader and fighter of the LIFG, who helped negotiate the deal with Saif Gaddafi, told TIME on Wednesday that the timing of the prisoner release was coincidental rather than a response to the bubbling unrest. "The decision was taken three or four weeks ago," he said by phone from Tripoli. "And in fact, maybe there is a message here: That the regime feels very secure, and that the government is very stable." At least, for now.